Taking Carrot and Stick to Executive Compensation

As noted in the previous post, greedy CEOs place their own financial interests above those of the companies they are responsible for and the needs of their workers.

And boards of directors, seemingly accustomed to such executive palm-geasing in their own organizations, look the other way, or cover their behinds by pointing to so-called so-called “compensation consultants” (also overpaid).

So here are the results of some thinking that followed the composition of the previous post.…

I recommended that CEOs and top executives (including college football coaches, university presidents and executives of non-profits) be compensated at a rate no more than five times the compensation of the average worker in their organization. (Note: Executive compensation - pay and benefits - can't be used to compute the average.)

Right now in this country among large institutions, the ratio is, shamefully, on the order of 300 to one.

The proposal also addresses the complaint about “high corporate taxes.” IF the top officers cut their compensation as described, I suggest that current taxes on their corporations be frozen (or possibly even lowered...see below.)

As noted in my previous post if the average compensation for employees is $50k, under this proposal, the higher-ups in the executive suite would get no more than $250k.

Because they are so smart, the executives should be able to manage on 250 grand a year. Rumor has it that quite a few folks do.

If the executives want to raise their compensation, they can so it by raising the compensation of employees. A $10,000 raise to the average employee, raises executive compensation $50,000.

Still not a lot by current executive pay standards, but that’s the point!

Now the flip side. If the corporations and their board do NOT make these changes, the corporate tax rate gets doubled (or made high enough to provide the "stick" to stop to the greed). Call this the "greed is bad" tax.

In short, fair and reasonable pay is rewarded; greed is punished. “Compensation consultants” are shown the door.

Those with sharp pencils might even be able to show that compensation fairness would actually increase tax revenues, if it encourages raising pay for all. The more the average worker makes the higher the total tax revenues from them. The amount might even bring in more revenue than now, even accounting for the “loss” resulting from lower taxes paid by reasonably paid executives.

If the new law results in significantly more tax revenue, the proposal just might allow for an actual reduction in corporate taxes.

Finally, higher paid workers will presumably buy more, which creates more jobs and more tax revenues. It also helps the economy…to say nothing of employee moral. The list of benefits is long.

One item on it might even be the postponement of the revolution, perhaps indefinitely.

Republican Riddle

Help me out here.

Republicans want to cut taxes.

Now we learn that multi-millionaire Mitt Romney pays a paltry 15 percent in taxes.

You’d think this would be cause for celebration among Republicans. Nice going, Mitt!

But oh, no, his opponents in the Republican presidential nomination mud bath are lobbing clods at him for not “paying his fair share.”

Isn’t that what the Occupy Movement has been saying for months? The rich aren’t paying their fair share. (Mitt, by the way, has an estimated net worth of $250 million.)

Could GOP candidates Rick Santorum, Newt Gingrich and Ron Paul be closet Occupiers?

The answer, of course, is — only if it is to their political advantage as they exploit the latest one-day scandal in this bizarre contest.

Has anyone asked Romney what he thinks of his low tax rate? Does he think it’s fair?

Why aren't all the GOP presidential candidates driven to the edge of GOP blasphemy with the question: Should Romney and other exceedingly rich Americans pay more?

Congressional Republicans have been rock-solid, vocal opponents to raising taxes on the rich.

This much is certain: Romney can rightly say his tax rate is “perfectly legal” — thanks to the likes to legislators and ex-legislators like, you guessed it, Santorum, Gingrich and Paul.

So, Mitt, point your finger at the real culprits, your opponents, and say, “You made me and my tax accountants do it!”

For more on this subject, read “Perfectly Legal” by David Cay Johnston. It will make you weep.

Where your 2009 tax dollars went; where this year's are headed

As I've noted before, the Friends Committee on National Legislation publishes clear and telling data on what the federal government does with our money. You can go the the FCNL web site to get the information on President Obama's proposed budget.

As FCNL points out, the budget is one kind of morality tale about American values, about what we as a nation believe in.

And as you prepare to pay your income taxes, you might find it enlightening to see where your tax dollars went in 2009. Double click on the image below for an overview.

A Taxing Question: Who's in the Middle Class?

Every time I hear John McCain accuse Barack Obama of raising taxes on the middle class, my reaction is “Huh?”

But today it hit me. In August McCain famously told Rick Warren of the Saddleback Church in Southern California that you aren’t rich until you make $5 million a year.

Could me mean that making less than $5 million a year are “middle class”?

If so, Obama, who has said he would raise taxes on those making more than $250,000 a year, would indeed be raising taxes on the middle class, at least as McCain defines it.

Somebody needs to nail McCain on his definition of “middle class.” A simple show of hands would do the job. Obama might ask all those who make more than $250,000 a year, to raise their hands.

Right.

In front of certain country club Republican audiences (in Arizona?), the response might be different. McCain, like fellow multi-millionaire George W. Bush, lives in a bubble.

(Another question: If you did raise your hand, would it really be unfair for you to pay more in taxes?)

It probably doesn’t matter with only six days left in the campaign and Obama firmly ahead, but a working definition of middle class would straighten out the back and forth about taxes. It would explain which class would and wouldn't won’t be taxed under Obama’s plan.

The clarification would also put the lie to John McCain.

Leave me out of this!

Headline writers at The Oregonian not only proclaim the news, their work proclaims a need for two daily newspapers.

Enter The New York Times.

On Monday, both papers ran on their front pages a story about an effort to get the Bush Administration to collect unpaid taxes.

The Oregonian story, which came from the L.A. Times-Washington Post News Service, dominated the page with this four-column-wide screamer: “Congress wants your unpaid taxes”

Wait just one second there, Bub.

"Your" unpaid taxes? Who, me?

The Times ran its own story in the lower left-hand corner. Its headline made it partisan, not personal.

“Democrats Seek Unpaid Taxes, Setting up Clash.”

On to the stories themselves.

In The Oregonian, the story says nothing to support the headline’s false intimation that I’m not paying my taxes.

It also specifically calls the so-called “tax gap” effort bi-partisan: “...Democrats and Republicans are talking it up as a way to fund politically appealing initiatives—and bring down the deficit to boot.”

The Bush administration’s position toward addressing the gap isn’t mentioned.

But back in the New York Times, the lede and headline are joined at the hip: “Congressional Democrats, hoping to finance an ambitious agenda without raising taxes, are on a collision course with the Bush administration etc.” From there on, the story is framed as a push and pull between the Democrats and various Bush mouthpieces.

At one point the Times quotes one Michele Davis in the Treasury Department. Ms. Davis is a spokeswoman, an unsettling term that for me unfailingly evokes the female-phobic humorist James Thurber (vis. "The Catbird Seat").

Anyway, Ms. Davis manages to inject a hackneyed Conservative shibboleth into her oh-so-well-crafted sound bite: “We are very mindful of the compliance burden on taxpayers who do follow the law.”

Wait a minute! “Compliance Burden on taxpayers who do follow the law.”

Now she’s doing what the Oregonian headline writer did—dragging me into this. I follow the law, and I frankly bear no “compliance-burden”—well, on second thought....

My "compliance burden" has nothing to do with how much I pay, but with how Ms. Davis’ boss and patron in the White House, George W. Bush, is spending my money on a policy that has led to mayhem and murder.

If only Ms. Davis would talk about THAT compliance burden.

Until then, she, and The Oregonian, can leave me out of this.